Wolf Money(Portfolio update end March 2026)part 1 early release
Politics of Oil
Beside the human loss to the war. Oil made the headlines. LWF was trying to buy a good oil play for my portfolio. Unfortunately, none got onto my buy list. The closest to an indirect oil play is Tai Sin Electric. The War and subsequent rise with the price of oil will hasten the transition into electric vehicles. If I may draw you back to a decade or more ago. During the last oil bull run, CNG vehicles were the hottest selling vehicle type. CNG vehicles, for various reasons never took off in Singapore in a big way due to mileage issues and the difficulty of finding a CNG station. The problem eventually killed its popularity. Electric vehicle is unlikely to go through the same path as CNG powered vehicles as the government green plan is set in motion. There wouldn’t be any ICE vehicles being sold in Singapore from 2030. ICE vehicles will be retired from our roads by 2040. Tai Sin Electric is in the sweet spot on the bigger trend of electrification in our country.
The prolonged higher oil price will cause a recession around the world. I quote a report, a USD $10 increase in oil prices cuts the US GDP by 0.1 percentage point. SPR in many countries are likely to release crude to slow the rise. Humans will adjust their behaviour accordingly to the price of oil. A drive to an out-of-the-way location for a famous eatery will be less frequent and a cut to electricity consumption by switching on the fan instead of air conditioning are some examples of demand destruction. Iran warned about oil hitting USD $200 per barrel. This situation is possible if the Iranians start attacking the east-west pipeline in Saudi Arabia. That is one of the remaining lifelines for Middle Eastern crude export. The pipeline transfers oil from the volatile Persian Gulf region to the Red Sea for export. The petroline has a capacity of 5m to 7m barrels of oil per day.
During these chaotic periods, certain jurisdictions will benefit. Singapore, HK, Switzerland and London might benefit from the exodus of funds from Middle-East. Australia’s economy is likely to do better due to higher commodity prices. The property rental market might do well given the returning expats and war migrants seeking safe haven in those countries. Our friends in Brunei, Sabah and Sarawak which rely on crude exports will see a boost to their economy.
On a personal front. My household just signed a new contract with a third party electricity provider to fix our electricity tariffs before March. The next revision of the SP electricity tariffs is going to show a much bigger jump. Oil has climbed more than 40% since the war started. Even with the lower oil price at 60 bucks previously, SP charges 29.11 per kWh for electricity. I don’t think oil will go much lower even if there is a ceasefire agreement. We are buying “insurance” at 27.68 per kWh fixed for the next 2 years just in case the oil goes through a protracted period of much higher price. Furthermore, the base rate for electricity tariffs will go up due to an increase in carbon taxes till 2030. I stocked up on washing detergent. Washing detergent contains oil-based chemicals. Higher oil prices, higher input costs on oil base products.
As for Singapore’s situation, the situation is less acute as we get most of our oil & gas supplies from our neighbouring countries. The citizens will be facing higher energy prices. I suspect there might be an off-budget announcement to specifically address the energy crisis by our government soon if oil continues to climb unabated.
It is very hard to see the end game of this war. As Newton’s third law of motion states, for every action(force) in nature, there is an equal or opposing reaction. The Israeli and American military can’t expect Iran not to react when they are threatened out of their existence. The US might have the most advanced war machine, but Iran has the time to put a dent to US economy. We can only pray this conflict doesn’t spiral into a nuclear war. There are no winners among the parties involved. God Bless. 🙏
Part 2 coming up.
*Lone Wolf Investor will be taking a short break during school holiday. Updating of the blog will be irregular.
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